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Reducing a 23% rates increase by selling the Convention Centre?

convention centre rising
The Wellington City Council’s $180m convention centre taking shape opposite Te Papa

Wellington.Scoop
The Wellington City Council has been considering a rates increase forecast of 23 per cent next year.

The NZ Herald’s Georgina Campbell was first to report the 23 per cent figure, which she says emerged as the council was halfway through its review of the Long Term Plan, which sets its budget for the next ten years.

She says the council is about to start the “trade-offs” stage, with decisions about how projected rates increases could be reduced.

She understands that one example given at a workshop on reducing rates increases was the council selling the Convention Centre, which is now being built (photo above), and leasing it back.

Mayor Andy Foster responded to the Herald report with a statement. He said the council was “months away” from proposing a draft ten-year financial strategy and rates increase for 2021/22.

“We are still working through the council’s priorities and are yet to determine a capital programme and levels of investment. This will be one of the most challenging budgets ever considered by council. This process will be undertaken in the context of outcomes from the Kaikōura earthquake and Covid-19 and while doing everything it can to keep rates affordable. It is far too early to speculate on any level of rate setting.”

In the DomPost, Tom Hunt has also reported the figure of 23 per cent, which he says would be the biggest rates increase in 25 years.

The figure was given to councillors during a closed workshop on Monday. Numerous council insiders have confirmed the 23 per cent figure but said council staff would be told to try to reduce that figure. The final figure would almost certainly remain in the double-digits.

Completion of the controversial Convention Centre has been delayed, and it’s now due to be ready for opening in 2023.

Increasing the rates, or borrowing
This year we had a 5.1 per cent rates increase
Mayor didnt want rates increase to be “unbearable burden”
PCGM: Covid and the convention centre
Gordon Campbell: The reality for the convention centre

39 comments:

  1. michael, 17. November 2020, 17:58

    Selling the Convention Centre to lower the rates burden – it would most probably have to be a fire-sale as it is hardly going to be perceived as a good investment.

     
  2. A J Corlett, 17. November 2020, 18:05

    Should the WCC sell the (un)convention centre? YES!
    Should the WCC then lease it back? NO!
    The ratepayers of Wellington (who the WCC are supposed to be servants of) have shown no response or desire to be in the ‘convention’ business. Leave that to the private sector, and focus on public services instead!

     
  3. michael, 17. November 2020, 18:37

    @AJ Corlett: Totally agree. The problem is WCC most probably won’t be able to sell the building without promising the purchasers a very expensive long-term rental to make it worth their while. And if it is sold for less than cost then the ratepayers lose both ways.

     
  4. Hel, 17. November 2020, 19:02

    The convention centre was built in response to demand from the commercial sector and they are paying for it through the commercial rates. Do conferences have a place in a post Covid future? Probably. Was there a good reason why the Council proceeded with a convention centre? Absolutely. Is the Convention Centre the reason behind a 20% plus rates increase? Highly unlikely.

     
  5. Claire, 17. November 2020, 19:24

    We have just had a 5 percent rates rise. 23 percent would be getting very high. WCC please pare everything back to basics. And borrow some money – it’s very cheap at the moment. A pitch in from Govt also needs to be negotiated.
    Yes sell the convention centre. Do we even need it.
    The Golden Mile can wait. Have express bus lanes instead that will move a few people. And make the fares cheaper at least at peak time. Main thought is the ratepayers cannot pay for everything that has been neglected or the nice to haves.

     
  6. Andrew, 17. November 2020, 19:27

    Hel, I guess when times are tight you assess all costs and weigh up which are most important. Let’s see what the WCC can actually cut back on. My guess is very little as they know we’re stuck paying whatever happens.

     
  7. David Cormack, 17. November 2020, 19:39

    Andy campaigned on keeping rates low. Nice work. That said, I hate local body politicians who campaign on that. Rates are needed to pay for a city so it doesn’t have shit pouring onto its cbd streets. Campaign on good spending choices instead. [via twitter]

     
  8. aom, 17. November 2020, 22:05

    Hel – from memory, you have been a Convention Centre come Hel or high water fan, almost from day one. This doesn’t give licence to be disingenuous. Most Wellingtonians know that the residential rates have been inching up to cover the reducing rates of the business sector for many years. Of course, it was always for the benefit of the city – never for the profits of the business sector who have no qualms about embracing the concept of trickle up socialism. From day one, the Convention Centre smelt worse than the city’s leaking sewers, with cost escalations that make the ego-driven sports centre deals look tame. There is also the irony that the Mayor has justified developer-centric work on the waterfront and other Council-owned sites because the Council should not be in the business of business. It looks like once again, the Councillors have been led up a blind alley by the administration and the business sector in the expectation that the residents will pick up the tab.

     
  9. TrevorH, 18. November 2020, 7:09

    A 23 percent rates increase would be an outrage in a recession. This Council must be replaced by Commissioners who will be tasked with getting the city’s finances in order.

     
  10. HR, 18. November 2020, 9:25

    Ratepayers do not have bottomless pockets. The council needs to pare back to the basics and do what it can to save money first.

     
  11. Adam, 18. November 2020, 9:38

    I agree with David Cormack above, money is needed to fund historic under-investment. Let’s hope the Council doesn’t use this financial pinch as an excuse to put further back essential environmental infrastructure like improved sewage treatment so we can reduce the amount of sewage sludge buried in the Southern Landfill. Until the sludge is reduced the Council can’t minimise waste, as general waste is needed to mix with the sludge at a 4:1 ratio to keep the site stable.

     
  12. Bernard Hickey, 18. November 2020, 9:54

    Here’s what happens when you under-invest in infrastructure for decades to keep rate increases and debt low. Yet none of the councillors are asking why Wellington is not using its balance sheet (ie borrowing) to deal with this? [via twitter]

     
  13. Sugar bowl, 18. November 2020, 11:03

    Is this the usual bait and switch? “Hey guys we managed to get it down to 10%” and everyone cheers even though that’s still obscene.

     
  14. Toni, 18. November 2020, 12:11

    The worse thing about this is that over the years WCC has ignored its basic responsibilities in favour of expensive vanity projects, but the ratepayers’ voices have been continually ignored. There is no way the council can expect to continue to operate in this manner without serious repercussions.

     
  15. Gwynneth Jansen, 18. November 2020, 16:05

    There are a number of councillors who have been involved in decision making around planning, the three waters and transport for some considerable time … and yet – here we are. Our city is now a bit of a mess; it took a period of sustained under-investment in infrastructure to get there and the earthquake shoved things along. Maintaining pipes, sewers and wiring isn’t sexy, is often unseen and no one cares about any of them until they go wrong. Large, above-ground projects are obvious and fulfil the ‘see what we achieved’ bottom lines.

    Getting back to Toni – what are the serious repercussions you have in mind? A rates revolt? It seems impossible to know how to rein in the council.

     
  16. Dave, 18. November 2020, 16:54

    I am at a third of my income. I had to make some tough decisions and so does the council.
    Fix the water. We need that along with other core infrastructure like roads etc. No more cycle lanes until better times. Turn the convention centre into the central library and don’t refurb the old one. $180M saved. Sell unnecessary land and properties including social housing. That’s govt’s job. Sell our share of the airport. Cut services like parks maintenance, don’t plant the roundabouts, berms, traffic islands with plants etc. Cancel the Singapore Air corporate welfare. That was $10M. The council needs to focus on maintaining basic services. Everything else is a nice to have and should be mothballed for better times or sold off. Time for council to really cut costs like other councils have had to and like I’ve had to. I’m not paying 23 percent, 15 percent or anything like it.

     
  17. michael, 18. November 2020, 17:19

    Time to look at WCC staffing levels as well and trim the fat.

     
  18. Claire, 18. November 2020, 17:21

    Another way to save money is for the WCC to cut staff and salaries. If it is anything like the Auckland council (which has a $700,000 salary), there is a lot of money to be saved.

     
  19. Toni, 18. November 2020, 17:25

    @ Gwynneth Jansen: A rates revolt might just happen on its own accord as many people do not have the money to pay any more! Maybe a petition/ a street march/ a vote of no confidence? But whatever is thought about needs to be supported by the masses to have any effect.

     
  20. k, 18. November 2020, 18:09

    Anything over 4% should be laughed out of the room, just like whichever council officer proposed it. These rates increases are ungodly in the middle of a recession and the council should be sacked for mismanagement if the increase is anywhere approaching double figures. And why aren’t they turning to record low interest rate debt instead of burdening the ratepayer with increases? Really disappointed in the new councillors if they agree to this nonsense.

     
  21. greenwelly, 19. November 2020, 15:32

    @SugarBowl. Yip, this is traditional bait and switch that council officers will be leaking out to make a +10 percent rate increase sound reasonable. The Regional Council did the same thing last year; remember the outrage at the “15%” proposed increase for Wellington City …. it eventually ended up at 9%.
    You always present at least two unacceptable choices to politicians. First the most expensive that will cause outrage amongst ratepayers. Secondly the cheapest option that will involve pretty severe cuts to services. Then there are always a couple of options in the middle. This game has been played for years, why would it stop in a COVID recession.

     
  22. D'Esterre, 19. November 2020, 18:58

    Gwynneth Jansen: “….what are the serious repercussions you have in mind?”
    Time for a commissioner, to replace elected members and staff.

     
  23. Northland, 19. November 2020, 23:09

    Suggestion to WCC. Create a list of employee and consultant salaries highest to lowest for everyone on the Council payroll. Discontinue the roles for the top 10% ‘fat cats’. Result – massive savings in salaries without any reduction in function.

     
  24. aom, 20. November 2020, 8:04

    Only 10% Northland? the chain of six-figure salaries is very long – WCC would make most corporates appear parsimonious.

     
  25. woke pileon, 20. November 2020, 10:08

    Northland and aom – that’s part of the problem isn’t it? Councils being run like a business, but what business would continue to pay/employ staff who made bad decisions and lost the business so much money. There’s no accountability from the councillors through to the officers. They jack up the rates to cover the shortfall and cash their paycheques. No doubt receiving a payrise every year too.

     
  26. Sean Rush, Eastern Ward City Councillor, 20. November 2020, 11:45

    Hi all, again, it is particularly mischievous of whichever of my colleagues is leaking this information without the context. We have a number of projects: water infrastructure, LGWM – Light Rail to airport, duplicate Mt Vic tunnel; Golden Mile bus lane; Library, Moa Point upgrade; de-carbonisation initiatives – we asked officers to tells us what it would all cost, and they did. Now we have to whittle them down to something that is affordable. How would readers rank the above?

     
  27. Julienz, 20. November 2020, 12:30

    @Sean Rush – Water, water, water and water. Is that clear enough? Stay in rented libraries if need be. All vanity projects on hold until you have fixed the basics. Front up to ratepayers about how bad you have let water infrastructure become and provide some credible estimates about what the basics will cost to fix. Stop planning for more people when it appears we are creaking at the seams on all fronts and can’t provide properly for the citizens – ratepayers, renters, homeless, the lot – we already have.

     
  28. James, 20. November 2020, 13:37

    Priorities: water infrastructure (which includes Moa Point Upgrade), Library (but keep costs under control). Those LGWM projects are not happening any time soon, so there’s no point wasting money on yet more consultation.

     
  29. greenwelly, 20. November 2020, 14:18

    @Sean. The Mt Vic Tunnel is State Highway 1. It’s not a local road, why is the council considering paying for this. Did you pay for the Arras Tunnel or Karo Drive? I doubt it. Does LGWM mean that ratepayers in Wellington are now paying for infrastructure that was always historically paid for totally from the NLTF or the taxpayer.

     
  30. Marion Leader, 20. November 2020, 14:41

    Cr Rush, how much is the Shelly Bay road going to cost?

     
  31. Ms Green, 20. November 2020, 15:01

    Good question Sean.
    Library, Light rail, water infrastructure – all urgent.

    Highly Questionable:
    De-carb sounds like my diet; LGWM are the wrong letters unless it refers to Moa Point contents. Moving? Yeah right.
    Moa Point? Privatised. Are ‘they” not performing to contract? It was never intended that sludge be transported anywhere.
    Golden Mile bus lane: means Lambton Quay far from being pedestrianised will be ‘busified’ with heaps of belching buses filling our lungs in a narrow concrete jungle.

    So there you have it. Easy. Now all you should have done is got the Council’s A into G and applied for “shovel ready” funds from the Government.
    So Sean is it 23% or more?? And what happens if the house is revalued to over a million dollars? Do I sell it to pay the rates and join the renters if I can afford to? Marton here I come.

     
  32. Dave B, 20. November 2020, 15:25

    I could stomach a 23% rates increase if it genuinely would see our water infra upgraded, rail extended to the airport, library fixed, etc. But not if it gets blown on vanity projects, council salaries and consultants’ fees while delivering nothing of value.

     
  33. Peter Steven, 20. November 2020, 15:32

    Sean – My ranking would be the Moa Point upgrade, water infrastructure, Light Rail, Golden Mile, Library and last of all the duplicate Mount Vic tunnel (which for the love of the planet and local environment I hope is never built – it will be completely redundant when we have rail out east).

    The state of the water quality in the harbor and on the South coast is quite upsetting to be quite honest. I would love to see a big effort put in by the council to fix this.

    Transport is my second biggest concern – an article came out recently that the council was against lower fares for low income people because there’s not enough capacity on the public transport network. This is ridiculous in my opinion. We need to get as many people using public transport as possible in these times! Build a high quality rail line out to the airport and many people would choose to use it over driving into the city every day.

    I’m also disappointed that the convention center seems to be going ahead – it’s going to be of little benefit to most residents of the city, but the cost is astronomical. Is it too late to re-purpose it as a library?

     
  34. D'Esterre, 20. November 2020, 17:37

    Dave: “Turn the convention centre into the central library and don’t refurb the old one. $180M saved.” It doesn’t have to cost so much to fix the library. This was pointed out by sundry engineers at that Council meeting, broadcast on YouTube during house arrest some months ago. We have been given a version of the truth over this. WCC staff want to do a whole bunch of deferred maintenance and refurb., along with the earthquake strengthening. The library wasn’t damaged during the 2016 quake; there was no need to close it. What it requires is remediation of the floor connections – a known flaw in buildings of that age. That remediation can be carried out for nothing like as much money as has been claimed by WCC staff. The refurb. can be deferred until WCC has the budget for it.

     
  35. Local, 20. November 2020, 18:05

    You are so correct D’Esterre.

     
  36. Claire, 20. November 2020, 18:48

    Sean. The idea of councillors tweeting about submitters to the DPS is unprofessional and unbecoming. I am seeing it on twitter right now. Also if there is leaking please confer with your leaders. I would go for water, Moa Point, and general sewerage on your list.

     
  37. M, 20. November 2020, 22:05

    Interesting thoughts… The Spark building sold for $200million. Does beg the question why the council lent money to the Monark building in Adelaide Rd which is only starting. Or could we combine the library and conference centre?

     
  38. TrevorH, 21. November 2020, 7:02

    Sean. Our collapsing water infrastructure must have first priority. Everything else is a distant second.

     
  39. Corey, 24. November 2020, 14:07

    The Council should find ways to earn more money. They should not be selling assets such as land/buildings without buying other such assets to make revenue. Selling the convention centre to lower rates would be short-sighted but I would expect the council to do just that.